Asciano board approves $12b takeover

Canada’s Brookfield Infrastructure said it will buy Australia’s rail freight firm Asciano Ltd in a deal valued at about A$12 billion ($8.84 billion).

Brookfield and its partners are offering existing Asciano shareholders the equivalent of $8.85 Cdn per share, with about three-quarters of that in cash and Brookfield Infrastructure Partnership units for the remainder. It owns the Westnet rail business in Western Australia state and controls the Dalrymple Bay Coal Terminal in Queensland. Asciano had requested a trading halt on Monday.

A sale of Asciano to Brookfield Infrastructure will change the dynamics of the Australian logistics industry, and will create a stronger competitor to rail group Aurizon.

Brookfield Infrastructure, which will also take on some $3.1 billion of Asciano debt, also intends to use the listing to further expand its infrastructure business in Australia.

Australian shareholders may receive an additional benefit, with a plan to convert some of the cash offer into a 90 cent special dividend that would give local investors a tax gain of up to 39 cents per Asciano share, bringing the total value of the offer to $9.54 a share. They fell as much as 7 percent earlier.

However, from the time the offer first surfaced until the end of last week, Brookfield’s share price had retreated more than 6 per cent, meaning the original non-binding proposal had likely drifted comfortably below $9 a share.

As part of the deal, Brookfield BIP, -2.14% will invest $2.8 billion for a 55% stake in Asciano, while Brookfield-sponsored and managed private funds will hold a 23% stake.

The remaining 22 percent will be split between two institutional partners.

Meantime Asicano has released its full year report to 30 June 2015, reporting a net profit of $359.6 million, a 41.1 per cent increase on the previous year.